EUR/USD Price Analysis: Trades with negative bias below one-month peak, bullish potential intact

EUR/USD pulls back from over a one-month peak amid a modest USD uptick on Monday.
Dovish Fed expectations cap the USD and help limit losses ahead of the ECB on Thursday.
The technical setup favors bullish traders and supports prospects for some near-term gains.

Haresh Menghani FXStreet

The EUR/USD pair attracts some sellers on the first day of a new week and for now, seems to have snapped a three-day winning streak to over a one-month peak, around the 1.0910 area touched on Friday. Spot prices currently trade below the 1.0900 mark amid a modest US Dollar (USD) uptick, though any meaningful corrective decline seems elusive.

From a technical perspective, the recent breakout through the 1.0800 confluence hurdle – comprising 50-day, 100-day and 200-day Simple Moving Averages (SMAs) – and a downward-sloping line favors bullish traders. Moreover, oscillators on the daily chart have been gaining positive traction and suggest that the path of least resistance for the EUR/USD pair is to the upside amid dovish Federal Reserve (Fed) expectations.

Some follow-through buying beyond the 1.0910-1.0915 area mark will reaffirm the constructive outlook and lift the EUR/USD pair to the next relevant resistance near the 1.0960-1.0965 region. The momentum could extend beyond the March peak, around the 1.0880 area, and allow spot prices to reclaim the 1.1000 psychological mark for the first time since January heading into the European Central Bank (ECB) meeting on Thursday.

On the flip side, any meaningful dip is likely to attract fresh buyers near the descending trend-line resistance breakpoint, near the 1.0870-1.0865 area. This should help limit the downside for the EUR/USD pair near the 1.0800 confluence support. The latter is followed by support near the 1.0755-1.0750 horizontal zone, which if broken could drag spot prices below the 1.0700 mark, towards the June swing low, around the 1.0665 region.

Economic Indicator

ECB Monetary Policy Statement

At each of the European Central Bank’s (ECB) eight governing council meetings, the ECB releases a short statement explaining its monetary policy decision, in light of its goal of meeting its inflation target. The statement may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. A hawkish view is considered bullish for EUR, whereas a dovish view is considered bearish.

EUR/USD appears supported by the 200-day SMA, for now

Following an early pullback to multi-week lows near 1.1670, EUR/USD now manages to reclaim the 1.1700 region as the NA session draws to a close on Monday. The steep retracement in spot follows the equally strong move higher in the US Dollar, as investors continue to assess the geopolitical landscape in the wake of the US and Israel attacks on Iran.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold eases some ground, approaches $5,300

Gold now surrenders part of the earlier advance, reshifting its attenton to the $5,300 zone per troy ounce at the beginning of the week. Indeed, the yellow metal’s firm performance appears propped up by incresing geopolitical jitters in the Middle East, which at the same time fuels the demand for the safe-haven space.